Half of all new restaurants fail. This startup wants to prevent that

Photo credit: Eric Chan.

The food and beverage industry is notorious for the amount of inefficiencies in its supply chain, resulting in restaurants simply throwing away large amounts of edible food. In 2013, it was estimated that restaurants in the US alone wasted 33 million tons of food.

That’s part of the reason why 50 percent of all new restaurants fail within the first year – there’s over-portioning, leakage, and a lack of digitized inventory.

Tel Aviv-based SimpleOrder, a supply chain management startup for commercial kitchens, wants to drag restaurants out of the stone age. The fledgling company recently announced it closed a US$2.75 million series A round led by Lazarus Israel Opportunities Fund and FoodLab Capital to help it scale.

SimpleOrder calls its product the Automated Inventory System, a SaaS platform that helps restaurants manage inventory levels in real-time.

“The restaurant industry remains almost unique in the retail world for its lack of systematic, digitized inventory tracking – leaving many managers and chefs in the dark regarding their real-time inventory. Many restaurants still handle stock counts with pen and paper periodically,” explains Guy Even Ezra, co-founder of SimpleOrder.

SimpleOrder’s team

The entire gamut of a restaurant’s operations can be supervised via the cloud. This includes things like managing suppliers, inventories, costs per recipe, as well as customer purchases. Guy says the platform will relentlessly track inventory levels every time a dish is sold and send real-time alerts when stock levels need to be replenished.

This helps small and medium sized restaurants reduce waste and gain control over spiraling food costs. Some clients have reported improved profit margins of anywhere between 5 to 8 percent, as well as a significant reduction in employee work hours.

So how exactly does SimpleOrder determine the cost price of a meal? Guy explains that all chefs need to do is input the ingredients of a dish and the quantities used. The algorithm will take care of the rest, including minor allowances for potential wastage as well as seasonal price fluctuations.

The startup currently services over 1,500 locations spread across 14 countries. The bulk of its clients are based in the US, UK, and German-speaking markets.

“The golden rule for operating at a profit in the restaurant industry is to keep food costs at a margin of 30 percent or less. Poor inventory management significantly affects a restaurant’s profitability,” outlines Guy. “Our solution counts each grain of food so you don’t have to.”